Elfenbein writes that when the spread between the 90-day and 10-year Treasury yield is 121 basis points or more, the stock market does much better than when it’s 120 basis points or less. (For those who normally don’t think in basis points, 100 basis points are equal to 1%, so 120 basis points are 1.2%.)

Crossing Wall Street

“Since 1962,” he writes, “the S&P 500 has averaged a 1.42% annualized gain when the yield spread is 120 points or less (that doesn’t include dividends). But it’s averaged 10.47% per year when the spread is 121 basis points or more. That’s a big difference.”

He writes that the spread has been over 121 points continuously for nearly seven straight years. “In fact, the indicator’s only big miss came in early 2008 when it flashed bullish several months too early,” Elfenbein adds.

Currently, the yield spread is 230 basis points. “If the 10-year yield stays at this level, then, according to our indicator, we don’t have to start worrying about stocks until the 90-day yield gets over 1%. It’s currently at 0.04%,” Elfenbein points out.

Meanwhile, the hottest investment book out this week is written by someone who has zero cred in the world of investing. Few would turn to Tony Robbins, the overly enthusiastic, square-jawed self-help guru, for investment advice. But Robbins, a very smart fellow, has turned to the giants of investment in researching his first book in over 20 years titled, MONEY Master the Game: 7 Simple Steps to Financial Freedom.

As he puts it in a column for Yahoo! Finance, he’s spent the last few years of his life interviewing more than 50 self-made billionaires, Nobel Prize winners, investment titans, best-selling authors, professors, and financial legends.

Yahoo! Finance

“My goal was to find a way for normal individual investors to take control of their money in a system that seems rigged against them. I vowed to discover the best possible information from the most knowledgeable and influential experts in the world,” he writes.

Basically, Robbins is serving as a conduit for the insights of investment greats, including hedge-fund star Ray Dalio. Others have rounded up the views of investment greats before, but few with the fame and pop-culture appeal of Robbins. (We can only imagine the sales of an investment guide by Oprah.)

While Dalio is famously press shy, he was happy to chat with Robbins about a number of investment topics, including the asset allocation of Dalio’s “all weather portfolio,” which includes just 30% in stocks, and 55% in a combination of intermediate- and long-term bonds. Dalio rounds out the portfolio with gold as an inflation hedge.

Robbins points out that Dalio’s portfolio generated a return of just under 10% during the 30-year period from 1984 to 2013. “You would have made money just over 86% of the time. That’s only four down/negative years,” he adds. “The average loss was just 1.9% and one of the four losses [was] just 0.03% (essentially a break-even year)—so effectively you would have lost money only three out of thirty years.”

He points out that the worst down year for the portfolio was minus-3.93% in 2008, when the Standard & Poor’s 500 was down 37%.

The news of Robbins investment book has inspired a lot of commentary in the financial press.

TheStreet

He starts by praising “health-care and health care-related companies away from the major pharmaceutical companies.” As he puts it, “the outperformance of everything in this group is so strong that it’s almost freakish. It’s almost dangerous not to be overweight in these stocks going into the end of the year.”

The piece goes on to list over a dozen stocks that he likes.

The problem is that he provides little explanation for each of the stocks in the article: Basically, a reader needs to believe in Cramer to buy these stocks.

While Cramer may know his way around the markets, his flip approach to touting stocks is not a substitute for a well-reasoned argument.

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